In 2015, an investigation was launched that would see how the rules around sms loans, or fast loans, could be tightened. There was talk of interest rate ceilings, cost ceilings, tougher marketing rules and requirements for written agreements, in any case what the investigative team would look at.
What is the inquiry about?
The report was intended to be presented to the Ministry of Finance no later than September 30, 2016, but so far it has not been presented even though it is the last September when this post is written. The status of the investigation is still “ongoing”, so we must see if they have reached anything sensible now in October. What the inquiry is about, you can read more about in our article tougher hold against sms mortgage companies.
No, it really does not go quickly when the government’s investigation groups are to arrive at something, it is almost 1 ½ years since the decision on the investigation took place, on April 23, 2015 more precisely. Of course, it would be desirable for them to put their papers on the table as soon as possible so that the industry can start adjusting their sms loans to the new rules that will probably be introduced at the turn of the year, if they are introduced.
Requirements for written paper agreements or not?
We at Cream bank have previously stated that we have no major objections to most investigative teams looking at except for one point: It should be investigated if it is possible to introduce requirements for written agreements for fast loans and similar loans. Here is an excerpt from the Committee Directive that was presented in the spring of 2015:
However, the inquiry believes that consumer protection should be strengthened and that the introduction of a requirement for written confirmation should be considered.
A requirement for the consumer’s signature or other written confirmation can give the consumer more time and better opportunity to consider the offer before accepting it. In this way, the consumer would be better placed to make informed decisions. Such a requirement could thus contribute to fewer consumers applying for and being granted impulsive and rushed loans. The investigator should therefore
- identify and analyze the extent to which the abolished consumer credit requirement has resulted in reduced consumer protection; and
- decide whether to introduce a requirement for the consumer’s signature or other written confirmation.
We can understand the investigation group’s reasoning. Written agreements can mean that fewer people will take hasty sms loans and that is good, but of course there is a back side to this as well, maybe…
Thus, state directives are often unclear despite having written lots of pages about what the directive is about, so even in this case. What do you mean by “consumer’s signature or other written confirmation”? When it says “other written confirmation” is it the same as being able to sign their loan agreement with e-leg, eg with BankID on file or mobile BankID? What else does “other written confirmation” mean if it is not about “consumer signature”?
Will e-leg be counted as written confirmation?
If you can at least sign your agreement with BankID or any other e-leg, it will not change the industry very much, as most lenders of fast loans already offer it. And the lenders who don’t do it may simply start offering this service as well, it’s just positive.
But there is one thing that makes us wonder if they really mean that signing with e-leg would be what they call “other written confirmation”, and that is that the requirement for the confirmation will give the consumer more time to consider the “offer” before it is accepted. If signing with, for example, mobile BankID would be okay, the customer will no longer have time to consider any offer. It is true that sms loans paid out in direct are often signed with BankID. Thus, there is a certain risk that they refer to paper agreements when they talk about written requirements for fast loans.
So why are we against written paper contracts for quick loans? Well, because it’s hostile to technology and the future. At present, when most cases are carried out online, should that apply to fast loans as well? Calling for a paper contract is like taking a step back in time. Nowadays we can use BankID for lots of important and sensitive cases, for example for logging in to our internet banks, tax accounts, the insurance fund, CSN and when we take out large private loans. It would be completely absurd if this were not to apply to sms loans as well.
Sure, paper contracts may prevent some people from undoing their impulsive loan applications, but it will also affect everyone else in need of a fast loan, people who do not borrow from an impulse. In such cases, alcohol may as well be banned because some who consume alcohol become alcoholics. Should we ban anything that has a back (which most things have) or do we choose freedom and agility? We believe in the latter alternative.